Wholesale Prices Fall, but Some Signs of Inflation Persist [New York Times]
Summary: A sharp drop in gasoline helped push wholesale prices down in September at the fastest pace (1.3%) in three years, the Labor Department reported yesterday: the Producer Price Index [PPI] measures what businesses charge one another for finished goods. But core PPI (minus energy and food) increased 0.6%, its largest jump in nearly two years. The mixed numbers left investors with mixed feelings about the economy and inflation; the stark core-rise suggests inflation is still enough of a concern that the Fed won't be considering lowering short-term lending rates any time soon. Some economists downplayed the core-PPI rise, seeing it as a result of a sudden rise in car prices. The Commerce Department reported that industrial production unexpectedly fell 0.6% in September; another cooling sign for the economy. Stock were down and Treasury-bonds were up in yesterday's trading. Importantly, today the Labor Dept. will release its Consumer Price Index [CPI], a vital inflationary measure; economists expect a healthy 0.2% rise in the core rate.
Related links: The Greenberg Indicator: Mixed Signals on This Market • David Fry's Daily Market Outlook • Options Trader: Tuesday Wrapup • Implications of a Softer PPI
Potentially impacted stocks and ETFs: iShares Lehman 1-3 Year Treasury Bond ETF (SHY), iShares Lehman 7-10 Yr Treasury Bond ETF (IEF), iShares Lehman 20+ Year Treasury Bond ETF (TLT) • S&P 500 Index (SPY), NASDAQ 100 Trust Shares ETF (QQQQ), iShares Russell 2000 Index ETF (IWM)
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